The procedure driven by virt-install (libvirt 0.8.2) has been managed via keyboard due to mouse pointer stayed frozen at center of VNC window all the time of installation and finally at Gnome Desktop came up at the end

Get access to text mode console and edit /etc/inittab to switch to initdefault 3

Opensuse 11.3 PV guest shows same behavior at Xen 4.0.1-rc4 (2.6.32.16 pvops) on top of Fedora 13 Libvirt 0.7.7. Notice, that 11.2 was impossible to install as PV Guest at all . In meantime problem appears just to bring up vncserver at DomU and properly tune Firewall.
I was also able to start Xvnc service via xinetd and found file /etc/gdm/custom.conf. However, all attempts
to find appropriate “/usr/lib/gdm/gdmgreeter” for [daemon] section of custom.conf to obtain Gnome Login to DomU failed.
Runtime snapshot on F13